When money is tight or you’re working on debt, big surprise expenses can feel like a punch to the gut. One day you’re doing fine, the next you’re wondering how to pay for new tires or holiday travel without reaching for a credit card. That’s when you need a sinking fund most.
What’s a Sinking Fund?
A sinking fund is a small savings stash you build over time for an expense you know is coming, even if you don’t know exactly when.
In effect, it’s a stress prevention plan — and you’ll be relieved to have it on hand when you need it. Consider this: Instead of another holiday-fueled credit card disaster in January or a surprisingly large vet bill, you save a little each month ahead of time. When the bill shows up, the money’s already waiting. No hard choices, no stress — just pay and move on.
15 Sinking Fund Ideas to Get You Started
If the idea of making a spreadsheet to track your finances makes you feel a bit ill, sinking funds are perfect for you. Just pick a few categories that match your potential expenses and go from there. Get inspired by these actual sink funding use cases:
Poorly-Timed, Inconveniently-Large Bills
- Car maintenance, like oil changes, tires and tune-ups
- Medical bills,like emergency room co-pays, dental work and prescriptions
- Pet care, like vet visits, grooming and medications
- Appliance repair or replacement
- Home repairs (Renters, this one’s for you too!)
Stuff You Knew Was Coming Eventually
- Holidays and all the travel, gifts, food and decorations that come with
- Birthdays and anniversaries
- Back-to-school shopping
- Annual service renewals, insurance and taxes
Opportunities You Don’t Want to Miss
- Vacations or weekend getaways
- Updating your wardrobe or investing in long-lasting replacement items
- Emergency travel, like last-minute tickets or hotel stays
- Tech upgrades, like a new phone, or laptop
- Personal goals, like classes, hobbies or gear
How to Use This List Without Overthinking It
Like we said before, this isn’t a budgeting approach for spreadsheet enthusiasts. But that doesn’t mean it’s a disorganized system.
Start Saving in Three Steps
- Start by choosing 3–5 that fit your life right now. For example, If your dog needs dental work every winter, start a pet sinking fund. Hosting Thanksgiving this year? That could be a fund, too.
- Prioritize where you want to put most of your money. Don’t feel pressured to fund them all at once — add one, build it up slowly and repeat.
- Write them down in your notes app or on a sticky note. The goal is to make it visible, doable and personalized. After all, you can’t track what you can’t measure!
Sinking Funds Save You From Extra Everything
Don’t think of a sinking fund as a savings account. The beauty of these funds is that they spread out the cost of something you’d otherwise have to cover — or go into debt over.
Knowing that you’ve got money put away for exactly the thing you’d anticipated is a great feeling. With your sinking fund, you save money, stress, time and anxiety — and stay out of debt doing it.